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Put cap on bank fees, BSP asked

Bangko Sentral ng Pilipinas

THE Bangko Sentral ng Pilipinas (BSP) should issue regulations putting a cap on “exorbitant” bank transfer fees amid high inflation, the chairman of the House Committee on Ways and Means said 10 days before monetary authorities meet on August 18.

Albay Rep. Joey Sarte Salceda issued the statement that also criticized high transfer fees for the use of the Instapay and PesoNet interbank transfer systems charged by some banks.

“If this is not avarice, I don’t know what is. The BSP should cut it,” Salceda said.

“We are experiencing elevated inflation. Key policy rates have gone up as a result. Meanwhile, very few if any banks have raised their interest rates on deposits, to at least transfer some of the benefits to savers. And yet, bank transfer fees remain high for several banks,” he added.

Citing a report by the BSP, Salceda said interbank transfers using Pesonet can be as high as P2,100 per transaction, with P550 being the highest charged by a purely-local bank. Fees for the use of InstaPay can be as high as P35, according to the “Summary of Corresponding Fees of BSP Supervised Financial Institutions (BSFIs) from the Disclosures Submitted as of 30 April 2022.”

Just friction

THE lawmaker also slammed transfer fees within the same bank, saying “there are even charges for supposedly ‘unenrolled’ accounts, which to me is just friction. What is the value-add that the bank is charging for?”

“Even money for pickup within the same bank can be charged as high as P100. Again, what is the value-add that merits charging? There isn’t even a guarantee that these transfers are safe. Just a few months ago, we saw mass incidents of bank transfer fraud and interception,” he said.

Salceda cited that a cap on fees could force traditional banks “to innovate and be more retail-consumer-friendly.”

“Look at the virtual banks: very high depository interest rates, of up to 6 percent per annum. No traditional bank matches this. Very low to zero fees, even interbank,” the lawmaker said. “If virtual banks are capable of offering the most retail-friendly services at very low fees, I don’t see why our biggest banks can’t.”

Salceda said placing a cap would force these entities to innovate and force them to really offer loans and other financial services instead of “milking” the small client.

Making profits

SALCEDA said he looked at the quarterly reports of the largest private banks in the country, “and all of them would still make profits even if all fees and commissions were reduced to absolutely zero.”

“And I’m not saying they do that. I’m just saying keep fees low and reasonable,” Salceda said.

“And, the larger the bank, it seems, the larger fees are as a share of total net income. Not capping fees sends a very bad signal and incentive to large banks: that they can make money off the average wage earner, without performing their crucial role as sources of capital for economic growth,” he added. “All they need to do is keep raising fees.”

Meanwhile, Salceda renewed calls for the enactment of the Virtual Banking Act (House Bill 677) and the Financial Technology Development Act (House Bill 659). According to him, both would accelerate innovation and encourage new players in the banking sector.

Salceda said he thinks local banks “are starting to get too relaxed and believe they can get away with such things as exorbitant fees.”

“Regulation will be good; but they [banks] will eventually find ways to circumvent regulation,” he added. “Competition is much better, because then they will have to straighten up for survival.”

Image credits: CNN Philippiness



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